How Do I Allocate My Investments

by brendon on September 17, 2013

“Where should I put my retirement money? What should I invest in? Stocks? Bonds? What’s the right mix? Should my asset allocation change as I get older?  How about my 401k?”   These are perplexing questions to answer—especially when thinking about the importance of needing money at retirement.

Retirement planning should include a superior allocation strategy; one that’s mindful of cost and capturing market rates of return from multiple asset classes.   For the lay person, it’s nearly impossible to do this on your own because the traditional industry has done a poor job of helping investors to understand this single greatest TRUTH about investing:  RETURNS comes from the MARKET and NOT a mutual fund manager.   This should be the basis of your thoughts about investing.

Three simple strategies to implement are the following:  1) Own equities long term; 2) be truly diversified;  3) Rebalance systematically.

Like a net, you should allocate your investment portfolio so that it captures returns from multiple asset classes with the least amount of activity.   The correct amount of STOCKS and BONDS in your portfolio depends on your CAPACITY and TOLERANCE for risk.   These are not always the same and can hurt you too.   For example, let’s say you’re in your mid to late 50’s—you lost a lot of money in 2008 and feel like you need to “catch up”; you have a lot of TOLERANCE for risk.   Therefore, you own a lot of stocks compared to bonds.    Here’s a question:  do you know what % of your portfolio you would lose if we experience another 2008?   If that number is nearly 40%—-can you afford or have the CAPACITY for such a loss like this?   If not, you should dial down your exposure to stocks.

An investor coach like myself will have access to tools that will show you what to expect for future returns based upon how well you’re capturing returns from specific asset classes.    I call these “tools to show you NOT snow you”.

If you don’t know what your expected rate of return is, your specific measure of portfolio volatility, and total costs in your portfolio—I can tell you that you’ll improve your allocation, lower your costs and have a lot more confidence about your financial future by working with an Investor Coach like myself.

Contact me via email or phone 913-679-9393 to find out how easy it is to get started.

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